All The Fintech - 1.8.18 - 11 Thoughts for 2018

This week I wanted to jot some thoughts on what I expect for 2018. Most of these are continuations of trends from the previous year, some obvious and some hopefully not so obvious.

1) The cryptocurrency market will collide with regulation - and I wouldn’t be surprised if it came through an enforcement or criminal action. The amount of wealth creation combined with a lack of KYC/AML on a lot of random exchanges is a bad mix.

2) I have no clue where crypto prices are going to go - that being said, I would be surprised if the largest coins (bitcoin, ether, etc) went up 100x again, but would not be surprised if they went up 10x or went down 100x. “Investing” in crypto is 100% speculation and no one can deny it’s a bubble, the question is when will that bubble pop. Might take several years…

3) Increased M&A and investment activity from large financial institutions - I think we’ll start to see a lot more M&A and investment opportunities from large banks. Over the past 3-4 years, almost every large bank has built out a dedicated “fintech” function as it relates to product, strategy, and investing. I think 2018 is when a lot of these groups start to crank on opportunities.

4) Increased VC activity in B2B - The largest VC firms seem a bit tapped out as it relates to consumer fintech (or have existing portfolio companies), and the focus for 2018 looks like it’s going to shift towards B2B / infrastructure plays.

5) Growth areas - I expect a lot more companies to get funding in the insurance, tax, crypto infrastructure, B2B payments, SME Lending, and security spaces.

6) AI is overhyped - AI seems to be the new blockchain. Reminds me of the “explosion” of big data in financial institutions a few years ago. I find that most fintech AI companies are not doing anything extremely novel, the key is the data not the algorithms. That being said, I think we’ll see a lot more application for helping humans process and understand output, so more of an “augmenting AI” play here.

7) Voice is not the new blockchain…yet - I don’t think 2018 will be the breakout year for voice. Voice is super frustrating unless it’s 99.999% accurate (a totally made up stat by me) and I don’t see a killer use case for my finances yet. I’d still rather click through (intelligent and contexual) options rather than have a dynamic free form with my voice when interacting with my finances.

8) More awareness and ownership by the consumer of their data - I think there will be a shift in how data is monetized in the ecosystem. Historically, financial data was shared, broadcasted, bought, and sold across the industry without much consumer interaction (i.e. credit scores). However, consumers have become increasingly aware of the effect this black box data sharing has on their lives. I expect to see a lot more dialogue with banks, consumers, media, and regulators on this topic.

9) Continued convergence to full stack fintech - I wouldn’t be surprised if there’s a big acquisition or merger between two “larger” consumer fintech entities with different products and different consumer profiles to go more full stack + diversify revenue. I also expect companies to offer new secondary products that follow their user base (e.g. Robinhood launching crypto trading, Coinbase launching a ratings desk, etc)

10) A lot more consumer fintech companies focused on specific communities - There are ton more APIs + developer platforms in market that are making it easier to create a financial product from scratch. This starts to open up more typically underserved markets (sub-prime, thin file, minority cohorts, etc) and I think we’ll see more “niche” plays in consumer fintech to try and gain initial traction.

11) Amazon and Paypal are the companies to watch - Ahh yes, the common “watch out for the large companies” making moves towards banking. That being said, I think Amazon will continue to offer new financial products for SMB’s while PayPal will continue to make in-roads with consumer wallet share, maybe even a mobile bank?

The So What

Fun tip for any articles behind a firewall, just add outline.com/ in front of the URL :).

In 2017, Codispoti was promoted to oversee JPMorgan’s network of 5,200 branches. Once again, she’s been tasked with enticing millennials, who make up 61 percent of the consumer bank’s new customers. Codispoti has visions of offering advice centers, akin to Apple Inc.’s Genius Bar, where customers can discuss financial goals such as saving for retirement or buying a first home.

Chase starting to adopt what I call the “SoFi” strategy, banking products offered through lifestyle experiences.

Encrypted messaging startup Telegram plans to launch its own blockchain platform and native cryptocurrency, powering payments on its chat app and beyond. Telegram is understood to be considering raising as much as $500 million in the pre-ICO sale at a potential total token value in the range of $3 billion to $5 billion.

TransferWise first announced the “borderless” account, which lets people hold up to 28 currencies through one account, last May. It followed on from a similar product launched by rival international currency exchange WorldFirst. TransferWise’s new account is linked to a debit card that lets people spend in local currency around the world on one card.

Continue to see new product offerings in cross-border consumer payments.

The country’s top internet-finance regulator, the Leading Group of Internet Financial Risks Remediation, issued a notice asking local governments to “guide” bitcoin-mining operations to make an “orderly exit” from the business, according to a leaked document online. Citing government sources, Bloomberg and Reuters earlier reported that China is planning to limit electricity supply to bitcoin miners.

Today, we’re excited to announce we’ll be bringing together all the different ways to pay with Google, including Android Pay and Google Wallet, into a single brand: Google Pay. With Google Pay, it’ll be easier for you to use the payment information saved to your Google Account, so you can speed through checkout with peace of mind. Over the coming weeks, you’ll see Google Pay online, in store, and across Google products, as well as when you’re paying friends*.

The Federal Housing Finance Agency’s ultimate decision could have wide-reaching ramifications for the mortgage market and home buyers across the U.S. Many nonbank lenders, which in some recent quarters have accounted for more than half of the mortgage dollars issued in the U.S., want the ability to use a credit score provided by a company owned by credit-reporting firms Equifax, Experian, and TransUnion.

Continued push for “alternative data” in mortgages and thus also the broader lending landscape.